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Closure of dealership worries and surprises

 
BY JENNIFER PALMER    Comment on this article Leave a comment
Published: October 10, 2008

Mike Denney Chevrolet has closed its doors and eliminated its stock of cars and trucks.

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ACROSS THE NATION
Dealers on edge
NEW YORK — Hundreds of thousands of new cars and trucks that would have quickly made their way to people’s driveways a year ago are now stacking up on dealer lots across the country, with potential buyers worried about whether they’ll keep their jobs, be able to pay for gasoline, or qualify for a car loan.

For auto dealers already suffering under the worst U.S. sales downturn in 15 years, the increasing cost of the credit they use to keep inventory in their showrooms means every Ford Focus and Jeep Grand Cherokee with a sale sticker in the window is chipping away at dealers’ razor-thin profit margins every day and threatening to send more of them out of business.

Paul Taylor, chief economist with the National Automobile Dealers Association, said that dealership closures spiked in September, promting him to raise his forecast of closures. He now expects 500 to 600 of the group’s 20,770 dealerships to shut their doors this year, up from previous estimates of 300 to 400.

About 430 dealerships closed last year and 295 closed up shop in 2006, according to the NADA.

The Associated Press

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Word of the closure spread last week, and by this week, the lot had been emptied. "They’ve been good in our community,” said Kathy Montgomery at the Guthrie Chamber of Commerce. "We’re just surprised.”

When contacted at the dealership Sept. 29, Denney declined to comment. He could not be reached by telephone this week.

Second dealer holds closing sale
GMAC provided financing for the dealership. A GMAC spokesman, Mike Stoller said the company doesn’t discuss actions involving individual dealers.

In general, he said, "we regularly review credit risk related to wholesale financing, and we take appropriate action to minimize that risk.”

A spokeswoman for Chevrolet also would not discuss the actions of an individual dealer. She advised customers wanting a repair under warranty to find another Chevy dealer by calling (800) 222-1020 or by going to www.chevrolet.com.

A second Chevrolet dealership, Purcell Chevrolet, has been sold and has been holding a closing sale, according to advertisements in The Oklahoman.

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